Time is running out for a last-minute economic rescue

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Today's Agenda

Seriously, Hurry Up With That Stimulus

It's time once again for America's favorite role-playing game: You're The Senator.

OK, so, for today's game you're Republican Senator Mitch McConnell. You run the whole Senate. Fun! It's a Thursday afternoon in July. An election is just three months away that could cost you control of the Senate. Not so fun! The economy just barfed up numbers that make the Great Depression look good in comparison. Previous stimulus measures you passed months ago are about to expire. Do you:

  1. Frantically hammer out a new stimulus package with Democrats and the White House, helping you and your colleagues and President Donald Trump secure re-election, or 
  2. Call it a weekend.

For some reason, the real-life Mitch McConnell chose option 2. He apparently wants to pass a stimulus package, writes Jonathan Bernstein, but can't get his party to settle on one that would be acceptable to all involved. So they may just give up? Why aren't they scrambling to throw money at people just months before the election? This seems like Politics 101. For some, it comes down to ideology. Or maybe they already think all is lost. Or maybe their gerrymandered political safety makes them less sensitive. 

Trump and House Democrats are still negotiating, with the White House pushing stopgap measures and the Dems holding out for more. But the Republicans' delay in starting talks, and the unseriousness of their opening bid, suggest they're ignoring the enormity of the economic catastrophe facing the country, write Timothy L. O'Brien and Nir Kaissar. While GDP has cratered and unemployment claims are at unthinkable levels and rising again, the Senate seems willing to just let a series of relief measures lapse one after another, throwing millions of Americans to the wolves:

Even if these immediate garbage fires are extinguished with a last-minute deal, we could endure recession-level unemployment and growth for months or years, warns Michael R. Strain. He notes the recent ghastly data will temporarily spring back, if only because they just can't go any lower, giving policy makers a false sense of security. This isn't the first time McConnell sent the Senate home in the middle of a crisis. It may not be the last.  

Big Tech, Overly Big Profits

Back when Big Oil was a thing people cared about, a huge problem for the industry was regularly reporting embarrassingly large profits that made everybody angry. Today Big Tech has replaced Big Oil in the Naughty Chair, and guess what: It too is reporting embarrassing profits, Tae Kim writes. Inconveniently, four of our very biggest behemoths — Apple, Amazon, Facebook and Google parent Alphabet — reported their monstrous hauls just a day after being called before Congress to explain why they're so monstrous. Awkward!

What's particularly insidious about Big Tech's breed of bigness is that it poses entirely new kinds of antitrust problems, writes Noah Smith. They're not like old-timey monopolies that raised consumer prices; often Big Tech's products are free (as in the case of Facebook and Google), or we eagerly pay huge sums for them (as in Apple's case). Instead, Big Tech creates a host of other anti-competitive effects that could squash American ingenuity, Noah writes. 

Consumers Consume Differently These Days

As you're no doubt painfully aware, we're all consuming very differently these days. No need to buy expensive clothes and shoes when you can go pantsless on Zoom (please don't). A lot of stuff is still scarce; good luck trying to find disinfecting wipes, liquid soap and frozen breakfast burritos. Seriously, where did all the breakfast burritos go? I've got to make my own breakfast now, like it's Little House on the Prairie. Anyway, all these changes have been quite the adventure for consumer brands, writes Sarah Halzack. People aren't buying makeup for obvious and not-so-obvious reasons. People aren't buying gum because now it's fine if your breath is like hot garbage all day. Business models are changing. Breakfast burritos are still not being made. 

Further Corporate-Coping Reading: Factory sector earnings were shockingly not terrible in the latest quarter. — Brooke Sutherland

Telltale Charts

Fed profligacy can't explain all of the plunge in bond yields, writes Gary Shilling, and stocks can't ignore the dire economic signal they're sending. Expect them to plunge too.

New data on the U.K.'s coronavirus death toll helps explain why Boris Johnson is taking the pandemic much more seriously now, writes Therese Raphael.

Further Reading

Europe must fix its banks' chronic debt problems by giving a central authority the power to restructure them. — Bloomberg's editorial board 

European expertise helped electric-truck-maker Nikola's rise. So why can't Europe produce its own version of Tesla or Nikola? — Chris Bryant 

India's richest man is building a new digital behemoth that could attract Western investment. — Andy Mukherjee 

Private equity isn't quite as rapacious as we've been told, new research shows. — John Authers 

Trump is wrong to suggest we need results on Election Night. An accurate count is better than a fast one. — Jonathan Bernstein 

ICYMI

Microsoft may buy TikTok, and Trump will order China's ByteDance to sell the social network's U.S. operations.

A Florida teenager was accused of masterminding the big Twitter hack. 

New Jersey is going in the wrong direction.

Kickers

How NASA keeps Earth's germs from reaching Mars.

The anglerfish deleted part of its immune system to fuse with mates.

Forgiving someone else is really about you.

"Success addicts" choose being special over being happy.

Note: Please send forgiveness and complaints to Mark Gongloff at mgongloff1@bloomberg.net.

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